Ramesh Ponnuru’s post reminds me of something I was thinking after a meeting with some air traffic controllers. My natural inclination has been to “privatize everything”. But, clearly, there have to be limits. Ramesh writes:
When the private sector is competent to do something that the federal government is now doing, then the government should simply get out of the field and let the private sector do it. I would hand over mail delivery to the private sector, for example. When only the government can do something—provide for the national defense, for example—then the mechanisms it uses to achieve that goal should be determined by a range of practical considerations. In some cases, putting a job out to private-sector bidders may get the job done better and cheaper than having government employees do it themselves. But contracting out can have its downsides, too: It could, in some cases, create a powerful interest group that works against the public interest.
Ask any pilot how the privatization of the Flight Service Stations has gone. As I mulled this I at first thought that the key would be “infrastructure”. That’s why the government can do roads, air traffic control, etc. But now I think a better test might be the market: If there’s a natural market for something, as in the possibility of real competition, the private sector should do it and the government should butt out.
You shouldn’t have two militaries, sets of roads, or air traffic control systems, so you’re better off having the government do it. But the government should, it’s now clear, get out of the postal delivery business. There’s plenty of robust competition due, in no small part, to the transportation infrastructure.
So, a partial list of the things the market can do, and the government shouldn’t would be:
- Insurance
- Health Care
- Education
- Postal Delivery
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